Feeding the dragon

People in China don’t typically eat a lot of beef. Their consumption is, however, trending upward, and in a country with 1.3 billion people, even a small increase in per-capita consumption adds up to a lot of beef. A new report from Rabobank International titled “The dragon’s appetite for beef” details social and economic trends affecting Chinese beef consumption and the opportunities created for beef-exporting countries.

Currently, beef only accounts for 8 percent of per-capita meat consumption in China, with pork accounting for 65 percent and poultry 22 percent according to the report. Beef is a more expensive luxury item, and more than 60 percent of beef consumption in China takes place in restaurants rather than in the home. But as economic conditions improve for many Chinese people, so does their appetite for beef. The report shows a clear correlation between per-capita GDP growth and higher beef consumption. The authors note the middle class in China, which now includes more than 300 million people, is larger than the entire U.S. population.

Additionally, Chinese people increasingly seek prosperity in urban areas rather than laboring in rural areas, making it more likely they dine in restaurants. During 2012, urban Chinese consumers ate an average of six kilos of beef compared with three kilos for consumers in rural areas. Growing popularity of Western-style restaurants, including quick-serve restaurants, contribute to that growth. McDonald’s is one of the fastest-growing companies in China and will have over 2,000 stores there by the end of this year.

Rabobank analysts project per-capita beef consumption in China will increase 24 percent over the coming decade. That figure is lower than it could be, they note, because supply shortages and high prices are expected to limit demand.

Beef production in China is flat and unlikely to expand to meet the growing demand, and several countries are poised to capitalize. China became a net importer of beef in 2010, and 2012 imports tripled over the previous year. And while organ meats accounted for the bulk of China’s beef imports in the past, muscle cuts now make up the majority.

China imports beef from Australia, Uruguay, New Zealand and Brazil, and to some extent from Argentina and Canada. Australia is the largest beef exporter to China, with a 45 percent market share.

The United States has been locked out of the Chinese beef market since 2004 due to BSE. Prior to 2004, American beef had a presence in China, and the authors note we could become a significant competitor if and when we regain access to the market. The report also notes that U.S. beef exports to Vietnam and Hong Kong have increased significantly in recent years. Hong Kong also has been importing growing volumes of beef from Brazil, while beef consumption in Hong Kong remains flat. There is some speculation that supplies of imported beef find their way from Hong Kong and Vietnam into mainland China through “gray market” channels.